India parties now can get foreign funding, activists say not OK

Clean up of election financing in India remains a daunting task as bulk of the funding still comes from anonymous sources [Jayanta Dey/Reuters]

New Delhi, India - Political parties in India are now exempt from scrutiny of their past foreign fundings. They can now receive political donations from Indians living abroad as well as foreign companies with subsidiaries in India.

A controversial amendment to a law on foreign donations, with retrospective effect, was rushed through parliament by the government last month without any debate.

The key amendment to the Foreign Contribution (Regulation) Act, 2010, which in its previous version banned political parties from receiving foreign funding, has drawn criticism from activists.

India's two main political parties - the ruling Bharatiya Janata Party (BJP) and the opposition Congress Party - were found guilty of breaking the law by a Delhi court in 2014. In its ruling, the court had said that the two parties accepted funds from companies owned by London-listed mining group Vedanta Resources between 2004 and 2012.

We have been saying for the sake of transparency, we have to make it compulsory for political parties to disclose all their donations, down to the last rupee

Prashant Bhushan, lawyer

A New Delhi-based election watchdog, the Association for Democratic Reforms (ADR), was litigant in the case.

"The sole purpose of this latest move is to save the two major parties of the country from the humiliation of being pronounced guilty of violating the foreign funding law," Jagdeep Chhokar, founder of ADR, told Al Jazeera.

"If foreign entities can donate money to political parties that means they wield control over the governance of the nation. No country with any self-respect would want its political parties to be controlled by foreign money," Chhokar said.

Protection from legal consequences

This is not the first time the law has been changed to ensure political parties are given protection from legal consequences of breaking foreign funding rules.

{articleGUID}

"Effectively, the law as it stands today is that any foreign company can donate any amount of money to Indian political parties through their subsidiaries in India. They can do so by purchasing electoral bonds which makes it anonymous," Prashant Bhushan, senior Supreme Court lawyer, told Al Jazeera.

Electoral bonds are promissory notes that can be encashed by a registered political party through a designated bank account. Bonds would allow anonymous, digital donations to parties.

"Any foreign company can now come and buy a political party here," Bhushan said.

With the latest amendment, the government has, in effect, ensured that funds received by political parties since 1976 cannot be investigated.

No country with any self-respect would want its political parties to be controlled by foreign money

Jagdeep Chhokar, founder of ADR

Under the old law, foreign donations received by political parties before September 26, 2010, were open to investigation by law enforcement agencies.

This is "blatantly unfair" said former chief election commissioner of India Shahabuddin Yaqoob Qureshi.

"This will make Indian elections and Indian politics vulnerable to foreign influence and pressure. The logic for banning it in the past was that foreigners should not influence India's politics," Qureshi told Al Jazeera.

"Now that logic is being altered and that, too, with retrospective effect. Retrospective effect means maybe there are some skeletons in the cupboard of these parties."

Defending the amendment, the ruling BJP party said it was "committed to ensuring transparency".

"This amendment has been passed with the consent of all the political parties in India," said Syed Zafar Islam, the BJP spokesperson, adding that his government brought "transparency in political funding".

"Earlier, loads of black money was coming into political parties. But now, with the kind of restrictions like a 2,000 rupees ($30) ceiling on cash donation by any individual to a party, there is much more transparency," he told Al Jazeera.

Crackdown on NGOs

Activists and rights groups point out that Prime Minister Narendra Modi's right-wing government has used the same foreign funding law to harass and target non-profit groups.

{articleGUID}

More than 20,000 non-government organisations in India have had their FCRA licences - that is required to receive foreign donations - cancelled or suspended since 2014, when Modi assumed office.

The government claims some non-profit groups had violated the law by not disclosing donation details or by using foreign funds to engage in "anti-national" activities.

In 2015, the home ministry put the Ford Foundation on a watch-list and suspended Greenpeace India's FCRA license.

Activists say if the government is going to restrict foreign cash, then those restrictions need to apply across the board.

"This is double standards. Why is foreign funding legal for some and illegal for others?" asked former election commissioner Qureshi.

"The logic given while using this law against NGOs was that this can be abused by foreign powers to destabilise India and interfere in our polity. If that logic holds, then how is it permissible to give foreign funds directly to political parties who run the government? For discrimination alone, this law can be challenged at the courts," he said.

The government crackdown on NGOs, activists say, was aimed at silencing advocacy groups that opposed government policy on forest rights, mining and environment.

Many countries have laws against foreign donations. Former French President Nicolas Sarkozy is under investigation for allegedly accepting funding from former Libyan leader Muammar Gaddafi.

Clean up of election financing in the world's most populous democracy remains a daunting task as the bulk of the electoral funding still comes from anonymous sources.

Donations disclosure system

"There are no free lunches. If somebody funds the election of a political party they are looking for something in return. That's why we need transparency of political funding, even domestic funding. Anonymous electoral bonds make the process opaque," says Qureshi.

Political parties spent over $5bn on campaigning for the 2014 parliamentary elections - a threefold rise in expenditure compared with the 2009 polls, according to the Centre for Media Studies, which tracks spending.

The two major parties have cornered most of the political funding, including the corporate donations, leading many activists and election watchdogs to call for public funding of elections.

The ruling BJP is the richest among India's seven national parties, having declared assets worth 1,034 crore rupees ($161m) in 2016-17, said a report released by the ADR. The opposition Congress Party, that declared assets to the tune of 225 crore rupees ($35m) in the same period, is a distant second on the list.

This will make Indian elections and Indian politics vulnerable to foreign influence and pressure

SY Qureshi, former chief election commissioner

India's newly formed Aam Admi (Common Man) Party had promised to change the opaque nature of political funding in India. Details of their funding were made public initially. But after being voted to power in the state of Delhi, they removed that information from their website citing pressure and harassment of their donors by the BJP government.

Activists say public funding of elections will ease some of the pressure on political parties to continuously chase corporate funds.

"Those parties which are in power have an uneven advantage. Because they are in power they get a lot of donations, most of which is in the nature of quid pro quo. So whoever is in power does not want to let go of this advantage," said Supreme Court lawyer Bhushan.

"We need political parties to go cashless. Right now, the vast bulk of their donations come through petty cash where donors are anonymous. More than 75 percent of funds of the BJP and Congress come through cash.

"We have been saying for the sake of transparency, we have to make it compulsory for political parties to disclose all their donations, down to the last rupee," he added.